Forget Rivian: Buy This TSX Energy Stock Instead

Rivian (NASDAQ:RIVN) had an incredible IPO, but it’s now at incredible highs. I think this other EV stock is a better long-term bet for investors.

| More on:
Make a choice, path to success, sign

Image source: Getty Images

It’s been a great time for electric vehicle (EV) initial public offerings (IPOs); case and point: Rivian Automotive (NASDAQ:RIVN). The EV company became one of the most anticipated IPOs of the year on the Nasdaq, with some claiming it can take down Tesla.

The IPO came and went and brought in US$12 billion, the largest American IPO since 2014. This comes from making massive partnerships before the Rivian IPO, leading to even more attention for enterprise companies. But while Rivian’s market capitalization is at US$108 billion as of writing, Rivian has yet to make any sales.

So, yes, shares of Rivian are up 56% since its IPO. That’s certainly something to celebrate. But all this excitement puts it at risk of a drop should it fall short of sales. With that in mind, it might be better to consider another strong energy stock.

Think big picture

Instead of looking to an EV company like Rivian that’s popular, pick an EV stock that’s set up for the future. I would look to Ballard Power Systems (TSX:BLDP)(NASDAQ:BLDP). Ballard is also an EV producer but not cars. It instead focuses on the fuel cell products to EVs in the heavy-duty sector. This includes marine vehicles, trucks, trains, buses, and more. And the company is global, stretching from China to Belgium and back to North America.

Yet the drop in EV popularity back in January left Ballard stock quite low. After climbing 36%, Ballard is now down 49% year to date. Yet with renewed interest in EV stocks lately, it could be a great time to pick up Ballard long term — especially at these prices.

Shares of Ballard stock trade at about $18.50 as of writing, a fraction of Rivian stock. Yet analysts give it a target share price of $27. Let’s look at why.

Short-term supply

The supply-chain disruptions put a hamper on near-term earnings for Ballard, which is why shares continue to trade near 52-week lows. There have been disappointing sales in China, with the need to adopt more fuel cell vehicles in the heavy-duty sector.

This sales growth issue could continue through 2023, coming from supply chain disruptions. However, China has a target of one million fuel cell EVs by 2030, and to reach that goal, its partnerships in China could soon rapidly expand. Furthermore, there has been massive growth in EVs in Europe, especially in large vehicles. And that interest isn’t going away anytime soon.

So, yes, in the short term, there are going to be higher costs and lower sales, and that’s going to keep shares low. But these short-term issues will certainly lead to long-term growth for those willing to wait. Ballard has tons of partnerships around the globe in an expanding industry. That’s something Rivian cannot claim right now.

Bottom line

Rivian is coming along at a time when there is so much competition in the EV industry. There are EV companies everywhere, and, furthermore, there are ICE-focused car manufacturers now turning towards EVs. Ballard stock has an edge on an industry many continue to ignore or underestimate.

A decade from now, if it comes down to a choice between Rivian and Ballard, I believe you’ll be glad to have Ballard in your growth portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Tesla.

More on Tech Stocks

question marks written reminders tickets
Tech Stocks

Nvidia’s Historic Stock Split: Will Investors See Bigger Gains?

Nvidia's (NASDAQ:NVDA) record 10:1 stock split entices many investors in several important ways. But some myths aren't technically correct.

Read more »

A worker drinks out of a mug in an office.
Tech Stocks

Want $1 Million in Retirement? 3 Stocks to Buy Now and Hold for Decades

Growth stocks such as Docebo and Celsius Holdings should help you generate outsized gains in the upcoming decade.

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

Missed Out on NVIDIA? My Best Growth Stock Pick to Buy and Hold

A TSX growth stock is a top pick and profitable investment choice if you missed out on the ascent of…

Read more »

grow dividends
Tech Stocks

3 Tech Stocks That Could Make You a Millionaire

Given their long-term growth potential, these three tech stocks could deliver oversized returns in the long run.

Read more »

Businessman holding AI cloud
Tech Stocks

Ready to Invest in Artificial Intelligence (AI)? 2 Stocks That Are Solid Bets

These two AI stocks provide investors with strong future opportunities as AI continues to become a part of our everyday…

Read more »

Dice engraved with the words buy and sell
Tech Stocks

Is Lightspeed Stock a Buy, Sell, or Hold?

Down 88% from all-time highs, is Lightspeed stock a good buy in May 2024 and can the TSX tech stock…

Read more »

Overhead shot of young adults using technology at a table
Tech Stocks

Forget NVIDIA: 1 Tech Stock to Buy Instead

Here’s why Shopify (TSX:SHOP) stock could be a smart long-term buy for investors willing to look beyond NVIDIA’s impressive growth.

Read more »

Lights glow in a cityscape at night.
Tech Stocks

2 Artificial Intelligence Stocks to Buy and Hold for the Next Decade

Qualcomm (NASDAQ:QCOM) and another well-placed AI stock could drive substantial capital gains over the next decade. Here's how.

Read more »